Guilty secrets: My mini-bond portfolio

Having started my investing journey as a more or less passive investor, I’ve sinned, sinned, and sinned again.

Still, it’s all relative. My active investing exploits make sense to me, and whether or not they’d find my decisions advisable, investors like Warren Buffett or Neil Woodford would recognize what I was doing, were they unluckily enough to be trapped in a lift with me and my laptop.

However, I’ve also got what we might call ‘off-spreadsheet items’.

These assets are part of my net worth, but for various reasons I don’t include them in my tracked and benchmarked investment portfolio.

For instance, I’ve socked away a big chunk of cash for a house deposit. Who knows if I’ll ever buy my white elephant, but I don’t want this six-figure sum dragging on my portfolio’s returns, since I’m not sitting in cash for reasons of investment judgement. Rather it’s for time horizon and real-life reasons.

I also keep my NS&I index-linked certificates to one-side. Usually these are lumped into my house deposit in my thinking, but sometimes I judge they’re too precious for that. Anyway, they’re also off-spreadsheet.

Illiquid/unlisted equities lurk outside, too. More on those another day.

And then there are things that are really risky, silly, or unjustifiable – or all of the above.

Things like my (mini) mini-bond portfolio.

Mini guide to mini-bonds

I don’t have a vast amount of money in mini-bonds. All told around 1% of my net worth.

That’s my main defence out of the way! (One can easily argue that it’s still 1% too much.)

The cynical answer is that they are the junkiest of junk bonds – pseudo-corporate bonds issued by companies so risky that professional investors wouldn’t touch them with a barge pole taped to a barge pole.

But I am not (quite) so cynical.

A mini-bond – like any corporate bond – is effectively an I.O.U. from a company in return for your money. An I.O.U. with legal obligations wrapped around it.

What it boils down to is you give your money to the company in exchange for the promise that your money will be returned to you at some point, with regular interest payments until then.

Some issuers have claimed they will allow existing mini-bond investors to rollover their bonds at the end of the term, which could be attractive depending on the environment (and the company’s fortunes).

Yields are far higher than what retail investors are accustomed to getting from conventional investment products these days, especially from savings accounts. However the risks are different, and much higher.

You usually get perks for being a bondholder, dependent on the issuing company – discount cards, free coffees or cakes, that sort of thing.

The prospectuses are thinner than typical corporate bonds, and presumably legally less potent. (I suspect most people read neither anyway, and as a small investor, realistically speaking you’re relying on others in either case.)

So far so dubious, but these characteristics interact to make mini-bonds even dodgier investments than you might think, for an easily overlooked reason.

Your word is my bond

What mini-bonds most remind me of are investments from the old days – and by the old days, I mean the 16th and 17th Century.

Old, old!

Back then merchants and the occasional outré aristocrat would band together to put money into ventures untroubled by anything so futuristic as regulators, compensation schemes, or a transparent market.

This meant the soundness of an investment had to be entirely decided upon by the individuals.

Now you might think that still happens when a stock picker like me decides to buy, say, shares in Apple or IBM.

But that’s not really the case.

When I invest in publically listed shares, I am freeloading on the thinking of thousands of investors who’ve previously weighed up the pros and cons of the company concerned.

All their deliberations are (theoretically) in the price.

And when a passive investor buys the market via an index fund, they’re benefiting from this “wisdom of the crowd” writ large.

But mini-bonds (unlike conventional bonds) are not traded on markets. Because professional investors are not their target market, even the initial yield can be set without having to worry about pleasing the world’s smartest bond investors.

Indeed, to bother with the fuss of issuing a mini-bond, a company may have already been turned down for a low-hassle loan from a bank or a specialist investor – entities that know rather more than most of us about evaluating debt-hungry smaller companies.

No, mini-bonds only have to appeal to the hoi polloi like me.

In fact it’s even worse, because false modesty aside I’m surely at the more sophisticated end of the potential mini-bond buyer spectrum.

Indeed I sometimes suspect pricing might just come down to figuring out what’s the lowest yield the company can get away with to attract retail punters – with a few free donuts thrown in.

Reader, I bought some

It was this unattractive proposition that kept me away from mini-bonds when they first showed up. I even wrote a couple of strident posts warning of the downsides.

But over time, I’ve softened my stance a little.

I noticed early issues from brand-driven consumer-facing companies seemed to do well. In contrast, a couple of the more opaque financing-focused ones defaulted.

There was something to learn here, so I decided to invest some money.

I didn’t do so completely witlessly. I spread my modest mini-bond allocation among multiple issues to reduce company-specific risk. I read the prospectus and the business plans. I avoided mini-bonds that smacked of financial engineering.

In particular I concentrated on companies where I could see several reasons to raise money via mini-bonds, rather than going to a bank.

For example, consumer-facing companies might see the bond as a publicity boost, or a way to recruit thousands of advocates who will act as unpaid marketers in directing their friends and family towards their products.

Finally, all the bonds I’ve bought were via crowd-funding platforms. While this is no substitute for a true market, my feeling is there is potentially a wisdom of crowds effect here, or at the least a lot of people who can give a potential mini-bond a sniff test.

And I have seen several mini-bonds rejected and withdrawn.

That suggests you can’t just flog any old nonsense as a mini-bond. (At least it has to be a certain kind of nonsense!)

My mini-bond portfolio

I am not going to name specific mini-bonds. Rather, here’s my portfolio in abstract terms, which I built up over a couple of years:

Company / sector

Yield

Fast casual dining

8%

Coffee chain

8%

Property firm

7.5%

Speciality coffee chain

8%

Craft brewer

6.5%

Fast casual dining

8%

Coffee chain (2x position)

11%

Speciality food retailer

8%

Energy infrastructure

8%

Property firm (5x position)

10%

Average

8.9%

Source: My off-spreadsheet records

So, fairly diversified in terms of company specific risk, but not so much in the bigger picture, as it’s clearly a bet on the consumer economy, principally in London. (You probably won’t be surprised to hear I was happier with this before Brexit!)

More positively, you can see the yield is quite attractive – though probably not enough to really compensate for equity-level risk for fixed income returns.

What do I mean by that?

Simply it’s very possible that one or more of these bonds could default and see me losing some or all of my investment, without the compensation that others could go on to deliver years of “multi-bagging” returns like with shares. My upside is capped (the interest payment, plus my return of capital) and the downside could be 100%.

I’ve not had any bonds default yet – and I’m past the halfway mark for my oldest mini-bond. But I’m prepared for one or perhaps two to cause problems. Beyond that and this ‘fun’ mini-bond portfolio will become an expensive headache.

Regardless, my 1% net worth exposure is not going to change my world. Putting money into a mini-bond is not like buying the lottery ticket of shares in a small cap stock that could become the next Microsoft.

The most I can do is grow my 1% to 1.5% or so over 3-4 years.

Big whoop!

So why, really, did I bother?

Well one reason is that I don’t call myself The Investor for nothing.

I am interested in investments of all kinds, and I have a very high risk tolerance.

It also doesn’t hurt that I have a website that’s dedicated to this stuff.

I can chalk it up as homework!

Of human bond-age

More seriously, investing in mini-bonds (and in the equity of start-ups) is active investing without a safety harness. You’re pretty much on your own, as I explained above.

There are some upsides. Specifically, you often get to meet the entrepreneurs behind the companies in an informal environment in a way that it’s just not possible with the CEO of BP, say – or even a legally-hamstrung AIM company director.

You can see how they hold their drink when you ask them a tough question and then you can suck on your straw and observe their answer.

I’ve mentioned before that one possible future I see for myself is as some kind of active angel investor, or possibly even the owner of an investment-related company. Long before then, I want to repeatedly test my ability to evaluate whether people, companies, and my money should get acquainted.

I want to improve. Until I get a ticket at the big table, these crowd-funded offerings are one testing ground.

Possibly I’ll lose some money. There’s always a price to an education.

Mini mogul

I must admit I enjoy my mini-bond investments at least as much as my far more sizeable investments in listed shares.

It’s fun using your investor card, for example, at a start-up you’ve put money into, and to have a chat with staff about how things are going.

Heck, it’s nice knowing your money went directly into funding the growth of something new – rather than that you just bought some second-hand shares off another private investor like yourself.

True, it’s not nice enough for me to allocate more than 1% or so of my funds to mini-bonds. But I’m glad to be involved.

Incidentally, I’m especially glad given that the mini-bond opportunities seem to have dried up recently.

From talking to insiders, it seems part of the reason is that peer-to-peer platforms have undercut the yields on mini-bonds. So companies are going to peer-to-peer instead of bothering with the rigmarole of issuing a mini-bond.

Will this end in tears? Will my mini-bond portfolio crash and dwindle, for that matter?

For all the talk of reinventing finance, it’s hard not to believe that the various Fintech1 innovations are being at least partly nurtured by super low interest rates that have encouraged bolder investors to venture into exotic and newfangled products.

And it seems unlikely these will all prove to be a ‘free lunch’ in the wider tale of investors chasing yields.

Time will tell. At least I got a free coffee…

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Two different inducements to buy mini-bonds were used (might still be..) by Brewdog and Ecotricity.
Brewdog offered discounts on buying their beer to bond-holders which is an additional benefit to the interest.
Ecotricty in contrast offered a higher interest rate (an extra 0.5% on top as I recall) to their electricity and gas customers.

Must admit I’m a bit shocked that the Investor would be doing mini-bonds. I’m like fixed-income products vs. equities, but I’m not sure I really see the advantage of mini-bonds. I don’t own any. They are totally illiquid and many are unsecured (some are even sub-ordinated). Why would you invest in mini-bonds at 9% when you have a HY bond fund at 6.5% or do 60% LTV bridge loans at 10-13%? A 50:50 barbell of those will give you the same yield, better liquidity, lower default probabilities and higher recovery rates. YOsome senior secured bonds on ORB at 7-8%

I see this is going to be one of these articles where I even include a radioactive symbol as the illustration on top of the entire post being about the risks, and then someone turns up in the comments to tell me that they’re risky. 🙂

As a rule, I mistrust P2P lending. Mainly because once you strip off all the bull P2P platforms are nothing but poor man’s fixed income securitisation vehicles, which raise finance for people / businesses who are oddball enough to be rejected by mainstream channels. Now, that in and of itself may not be a problem, after all ugly veg are not bad, only awkward to peel. Also, the fact that these people didn’t give up but instead went and found an alternative source of funding indicates that they’re at least persistent. That is usually an asset. But this is were the positives (in my opinion) stop.
Though linear regression models earned some criticism in 2008/9, I think a model is still better than no model. Both P2P and mini-bonds are unmodeled risks. Unquantifiable does not mean unassesable, but if the only problem with them is that they are too unique to pass the big bank/ PE house red tape then surely a more “soft metric” approach is necessary, not less. I’m thinking an old school bank manager who’d spend a couple of hours talking to the prospective borrower to understand if his zany business idea has merit enough to put money behind it. This is the opposite of the P2P investment process.
Perhaps I’m more cautious than an average Monevator reader, yet to me this smacks too much of the method I use to select horses at corporate racing events – based on name and colour. My results with that so far haven’t been splendid; I hope your run with mini-bonds turns out better.

p.s. For the avoidance of doubt, I have no argument with people saying the risks aren’t worth it, or that I am unwise to be taking them. But please do acknowledge that I’ve considered them, in-depth, I likely understand them, and I’ve just written 2,000 words on the very subject before formulating such a comment! 🙂

I haven’t done mini bonds and the risk reward seems asymmetrical to the downside. I have done AIM in the past and without access to the board, but mostly burned.

I am interested in your “Illiquid/unlisted” that you don’t yet want to discuss. I’m now at the stage of life/wealth/experience where I do some “angel” investing, though with me having skin in the game I ride them like no angel ever would, and am interested in hearing from others going via this *very* small startup route.

@ZXSpectrum — I’m not seeing ORB bonds yielding 7-8%. Leaving aside Premier Oil and Enquest from the E&P sector (which obviously have their own potential risks and rewards) the highest yield to maturity I can see is a little over 6%.

And that’s for a bond that does not mature for 15 years!

I am obviously not going to downplay the risks of mini-bonds (see my comment above!) but the term for these is 3-4 years, and that is a factor in the equation for me. The highest yield I can see on the ORB for that sort of term is 3.8%, from a Brexit-fear hit property developer. Typical yields around the 3-year mark are more like 1-3%.

I agree re: some of the high yield funds, a couple of which I have traded in and out of this year. But they have their own issues, including opacity and duration uncertainty. (Some invest in some pretty racy stuff, too).

Agree the liquidity benefit from the alternatives you list is massive though. That’s one reason I only have c.1% of my net worth in mini-bonds. 🙂

As I say, we’ll see how things turn out. 🙂 Rather like P2P with Zopa and RateSetter where I’m as keen as anyone to stress the risks but have so far lost perhaps £50 over eight years (a few soured micro-loans on Zopa when its credit checking wobbled 6-7 years ago, easily compensated for by the far superior interest rates I got on the total pot) I have not yet lost any money on these mini-bonds. I presumed going on that at least one would default and possibly two. What I think would really hit me would be something systemic, such as a post-Brexit meltdown in London that turned what was a booming economy into a downturn, but so far — touchwood, and against my post-vote expectations — that doesn’t seem to be happening.

I’d stress again, these mini-bonds are risky. This is not an article saying “hey do this!” (None of my articles are that. 🙂 )

It’s hopefully an interesting (to some!) run through about how a private investor might think about the pros and cons of a newfangled asset class *in the round*, and weight their exposure accordingly (which they may well decide should be zero exposure). Personally I love reading well-balanced stuff like that, and don’t see enough of it.

@gadgetmind — I may discuss it in the future, it’s not really significant exposure anymore (I used to have a (for me) big holding in a start-up I was connected to but I sold out years ago). I could see it increasing in the future though. I mentioned here because I am not going to track it in my portfolio and hence it sits outside it, as it’s not like-for-like with what a vanilla fund manager is investing in, and any multi-bagging winner I stumbled across would skew my returns unrealistically! (Nice problem to have, admittedly).

Yes, @TI has said they are risky, but I think that misses the main point.

Mini-bonds are terrible investments on a risk vs reward basis. I have no issue with high risk, I actively embrace it, but I always have an issue when there is high risk without commensurate reward, which lets face it, is exactly what mini-bonds are.

The upside is at most the X% coupon for Y years, whereas the downside is a very realistic default with terrible recovery rates – it would be uneconomic to even attempt to recover money through the courts.

Buying distressed debt at par, which is defacto what all mini bonds are, is always a no, no, no.

@TI – Why do you (or have you) spent time on 1% of net assets in this niche area. It’s never going to make a material difference to the portfolio, even with no defaults, so I’d question if there really is any point – other than mixing with the in-crowd of startups, which while fashionable, is likely to seriously damage ones wealth. Also, if you ever want to run an investment fund, advertising that that you were a subscriber to mini-bonds is not going to be a plus point, more like a red flag!

@gadgetmind – Angel investing is too popular and fashionable. Valuations are expensive, London is awash with money for startups, so it’s not an area that interests me in terms of investing.

Yes, @TI has said they are risky, but I think that misses the main point.

…and go on to explain the risks I have supposedly “missed”.

Here’s what I wrote in the article sitting above us:

…you can see the yield is quite attractive – though probably not enough to really compensate for equity-level risk for fixed income returns.

What do I mean by that?

Simply it’s very possible that one or more of these bonds could default and see me losing some or all of my investment, without the compensation that others could go on to deliver years of “multi-bagging” returns like with shares.

My upside is capped (the interest payment, plus my return of capital) and the downside could be 100%.

i.e. More or less what you just said after saying I had “missed the main point.”

It’s somewhat infuriating to be honest to the way my brain works, and always makes me think I should just disable the comments.

However most of the rest of your comment is interesting and a useful perspective. 🙂 I disagree that they’re “distressed”. That’s an inflammatory bit of colour, really. I agree the risks might be similar to conventioned distressed debt though.

The mini-bonds sit outside of my portfolio for the reasons you go into. I don’t consider them part of my investing strategy, as I said in the piece.

Also, when saying I may lose loads of money and it’s a huge red flag, let’s remember I’ve yet to lose a penny. (Touch wood!) I’m more than halfway through on the first of these bonds. And I am explicitly testing my ability to judge these situations and to invest in the right ones, as I detailed in the piece. 🙂

When you got into the section about WHY you purchased them, I knew the reason before I read it. I too have taken lots of financial adventures for the purpose of generating content for my website. Sometimes the investment returns are not purely financial!

I assume these businesses aren’t issuing any sort of financial updates (let alone audited financial statements), so the first time there is a hint of trouble is when the interest payments just don’t arrive

I am rather reminded of former Citigroup CEO Chuck Prince’s quote “As long as the music is playing [in the credit markets], you have to get up and dance”

@TI – Sorry, I wasn’t very clear and probably unnecessarily inflammatory in my language. I apologise for that. Your article was well balanced.

The point I was trying to make – but didn’t make clearly – is that you could have bought debt that was comparable from a credit perspective to mini-bonds, where they did have the potential to provide much greater returns, it’s just this is not marketed to retail investors, or available in small amounts. It’s not your ability (or inability) to select the right mini-bonds from the mini-bond sector I’m calling into question, it’s more that if you are actively investing in mini-bonds, you should really have been actively investing in individual corporate bonds instead

I don’t think I said I expect you to lose loads of money (and I don’t expect you to!), although I understand why it might be inferred through the very real risk of increased default. I do think you have given away upside you could have grabbed, for similar risk, using individual corporate bonds bought on the secondary market, rather than individual mini-bonds on issue. That is the point about the red flag. If you have owned mini-bonds and disclose it, prospective investors will know you bought on issue at par and I would expect them to question why any serious fixed income investor would do that.

I’d like to apologise to The Investor if he thought I was being overly critical. I suppose the point I was (badly) trying to make was that mini-bonds seem from my perspective to be an untested product that doesn’t offer any clear advantages over FI alternatives.

Being rather simplistic, from a buy-and-hold perspective, the risk-return proposition for any fixed income credit product is a balance between yield (or spread to Govts) and LGD (loss given default). On senior unsecured High Yield (spec grade) bonds, historically default rates average just under 4% (1-2% over most of the cycle, rising to 12% in times like 2008/09). With average PV(recovery rates) averaging 45%, the LGD on a diversified portfolio of HY bonds (say a tracker fund) might be in the territory of 2%. If we look at the spread pickup on the Merrill Lynch High Yield Index (https://fred.stlouisfed.org/series/BAMLH0A0HYM2), the current spread is around 500bp, so 2.5x the long-term LGD, a level, which while not expensive, is not hugely compelling. Earlier this year spreads reached 900bp, a pick-up which would have been more than enough to compensate for the LGDs seen in 2008/09.

Similarly, since 2002, I been investing in senior secured (sub 70% LTV, resi and commericial, max 12-month) bridge loans. There is a paucity of data on bridges but default rates around 10% are quoted by professionals and fit my experience. Recovery rates average 80%+ (this fits with Moodys who put senior secured bank debt PV(recovery) at 85%). So LGDs are in the territory of 1.5-2%, with a strong cyclical bias (<0.5% in benign credit conditions and 5%+ in periods like 2008/09). At yields of 10-12% available via some P2P platforms this not an unattractive proposition, albeit with big caveats around platform risk and the large spread taken between borrower and lender rates.

My issue with mini-bonds is therefore that it's hard to quantify the LGD to any degree. Given the small size of many companies raising debt compared to those in the HY bond market, it would seem likely that default rates would be higher. Moreover, given their balance sheets and lack of tangible assets, some might recover very poorly. I've also noted a sneaky trend for some mini-bonds to be mezz or sub-ordinate financing, where LGDs are likely to be much higher.

@ZXSpectrum @JonWB — Cheers for the further interesting comments and comradely sentiments. I do appreciate I can be on a bit hair trigger for certain things, so no hard feelings. 🙂

It’s Friday night so just briefly I have of course invested in (traded, really) individual corporate bonds as well as been in and out of listed bond funds.

Mini-bonds are only 1% of my net worth, remember. I own / have owned *lots* of other stuff, at the same time, which incidentally is another of my bugbears with the Internet.

It’s always like the Nintendo versus Xbox debates. Well, in the investing world IMHO you don’t have to be all of one or the other. You can (and often should) own both, plus a Sony Playstation and an iPhone. Metaphorically speaking.

I’m also familiar in general with the state of the yield curve day-to-day, which is why I could immediately push back at the suggestion of 7-8% YTM on ORB corporate bonds with anything like the same time on the clock as these mini-bonds.

But I’m definitely not a specialist fixed income investor, and it doesn’t take much for me to move any bond money back into equities, to be honest.

Generally I think bonds are far harder investments than equities, most especially individual bonds where you really need to understand capital structures on a per issue basis etc. I think equities have a lot of inherent traits that (in aggregate) can cover a good few misjudgements, compared to bonds. So I’ve tended to only trade the retail stuff, such as the ORBs (virtually all of which could be stagged for 2-3% or more in a month or two in the years that the ORB market was active with new issues) and much more so over the years the bank preference shares and debt, where emotion and a retail ownership base has led to I’d argue non-fundamental swings from time to time. (Don’t get me started on how retail investors wheel out poor pensioners when there’s a problem with their bank securities, and then once they’ve won the day start complaining/expressing surprise that the Powers That Be seem reluctant to nurture a thriving fixed income secondary market for private investors…I know it’s (much) more complicated than that, but I think that angle is under-expressed…)

I’ve also done some more exotic stuff via closed-ended funds (e.g. this lovely) and I used to write about it more here on Monevator (as per that article I just mentioned, or this, or this, or this).

But to be honest doing this article has reminded me of why I don’t much these days.

Easier just to remind people about world tracker ETFs and say to everyone don’t do anything risky, ever.

(Ironic I spent the early part of this week reminding people about the virtues of government bonds, and why they shouldn’t be dismissed on the back of a few sensational clickbait articles, and by the way there’s such a thing as redemption yields. One really can’t win in this new media age.)

Incidentally, I believe I see traits to these mini-bonds — at least the ones I’ve invested in — that traditional bond investors may dismiss that give me more comfort, some of which I allude to in the article. Not enough to make them not-risky, or superior investments, but interesting to me. Time will tell! 🙂

@Neverland — Thanks for that searingly brilliant observation, I had thought I’d be called up individually by the companies concerned at least six months in advance of any problems with payment so it’s good to be put straight. (They do issue updates, incidentally, although not particularly rigorous or detailed. It’s fairly moot, anyway, given they can’t be traded and as others have alluded and I said in the article, any recovery will be difficult.)

I think i speak for many people when i say I’m glad you’re writing these articles and please don’t let negative comments put you off. I won’t be investing but if i did it would be my decision. And no it is not possible to get an illiquidity premium without investing in some illiquid products.

I agree with john^, I very enjoy these articles very much, so please keep writing them.
As for the “negative” comments, whilst some are rather pointless, many are extremely informative. Giving a whole different perspective on the subject.
So keep them coming.

Thanks for the input guys. I do agree about some of the comment content, regardless of whether it’s positive or negative — the more detailed/thoughtful stuff mainly.

It’s when people don’t seem to have read what I’ve written and then cite something that’s already directly addressed in the piece that I lose the will a bit. I should probably toughen up, as it’s as much a feature of Internet commenting as a response to anything here (certain people just have to say *something* it seems) but it winds me up rotten.

And then there’s the talk of being shocked that I would own something or discuss something they deem risky or similar (as well as an silly comment I deleted claiming I was just trying to get controversial clickbait). It’s sort of infuriating after writing 2,000 words.

Virtually all mini-bond articles I’ve read either salute their yield but have one line saying “they are not covered by the FSCS and you could lose your money”, or they’re about one of the ones that went bust and say their untouchable. I think the truth is probably in-between; others may differ which is fair enough but my point is at least acknowledge the attempt I’ve made to explore all the angles where appropriate, otherwise what’s the point? 🙂

I am another that enjoys reading these types of articles and I hope you continue writing them. I have in the past dabbled in mini bonds and recall investing a few k’s in Hotel Chocolate with interest paid by way of quarterly boxes of chocolates delivered by post. Like you, I have a very small percentage invested in “exotic” products that adds a bit of spice (and chocolate) to an otherwise passive and untouchable portfolio. Having something small to tinker with stops me messing up the ‘fix and forget’ pot.
Keep up the good work – I’m still pondering British Land and the like as a result of your previous article.

Well I thought this was an excellent article. Informed me about an investment area I was vaguely aware of, had wondered if I ought to take a closer look at… and helped me form a better opinion of it (which is, for me, avoid). Completely understand the motivation though… my own “but it’s really interesting” weakness is country/sector-specific/”thematic” ETFs when really the easy option would be to just bung it all in VWRL.

I do have a relative who’s into these mini-bond things. In their mind, “bond” simply seems to be equated with what the so-called “wealth manager” who runs the rest of their money tells them is a comparatively safe investment. Or even a “savings bond” at the bank. Last time I saw them we took a closer look at one of their bonds, in some ethical/fairtrade online clothing retailer. Alarm bells for me were: in the annual report filed at companies house, the auditor’s comments included some note about the continuation of the company depended on it’s success issuing more debt/renegotiating existing debt (but maybe I’m reading too much into the auditor’s “Emphasis of matter – Going concern” in https://beta.companieshouse.gov.uk/company/06092687/filing-history/MzE1MzYwMTA4MGFkaXF6a2N4/document?format=pdf&download=0 ; I don’t read enough of these things). And then my relative mentioned that one of the perks of the bonds was some credit to spend in their store… only problem was, it didn’t have a single thing they wanted to wear and the couple of items they’d ordered anyway were awful. But good luck to them; if it doesn’t work out they’ll at least have the satisfaction of having tried to make a difference.

@PassivePete @Anon – Thanks for the positive feedback. I know I’d enjoy these articles if I was a reader, which is the major motivation for writing them. But I suppose one is more likely to post a comment if you disagree, as in most things in life. As we’ve discussed before, the other issue is the split personality of this site. 🙂 If someone is a passive portfolio acolyte and reads Monevator mostly for that reason, I surely seem heretical when I post off-piste!

Hi TI, came to this post from a link on a more recent article, and found it very interesting!

I don’t think (hah!) I’ve invested in any mini bonds per se so far but have definitely invested in consumer facing crowd fund type of investments, but none of them had offered the fixed return so I am presuming (now hoping after reading this!) that they were not mini bonds but more like mini-equities?

As someone mentioned in the comments above, BrewDog is one of them.

Have you ever invested in any of these type of things? Seems like you get the whole buzz of investing in companies that are not yet on the stock market, with way more information on financials and business plans, and also with way more upside if the company goes 10x or whatever. If so what are your thoughts and have you thought about (or written already?) an article on those?